Swiggy is wrapping up its bid for a $1.4 billion IPO, and Zomato has also pushed restaurants to maintain parity in recent years, directly reducing competition in the market. File | Image source: Reuters
An investigation by the Competition Commission of India (CCI) found that food delivery giant Zomato and SoftBank-backed Swiggy violated competition laws by engaging in business practices that favored restaurant chains listed on their platforms, documents showed.
According to non-public documents prepared by CCI, Zomato entered into “exclusive contracts” with partners in exchange for lower commissions, while Swiggy guaranteed business growth for certain players with exclusive listings on its platform.
The CCI’s investigation wing, in its findings reviewed, noted that the exclusive arrangements between Swiggy, Zomato and their respective restaurant partners “hindered the market from becoming more competitive”. Reuters Friday (November 8, 2024).
The CCI documents were not made public as per its confidentiality rules and were shared with Swiggy, Zomato and the complaining restaurant group in March 2024. Their findings have not been previously reported.
Zomato declined to comment, while Swiggy and CCI did not respond Reuters Query.
Also Read: Zomato, Swiggy walking platform charges in select cities during festivals
An antitrust investigation into Swiggy and its archrival Zomato began in 2022 after the National Restaurant Association of India complained about the impact of anti-competitive practices on the platform by Swiggy and its archrival Zomato.
Food delivery giants Swiggy and Zomato have reshaped how Indians order food in recent years, listing hundreds of thousands of stores on their apps at a time when both smartphone use and online ordering are growing rapidly.
Swiggy will end its bidding for its $1.4 billion IPO (India’s second largest IPO this year) on Friday (November 8, 2024), and Zomato has also pushed restaurants to maintain price parity in recent years, directly reducing market competition.
This practice affects restaurants as they are unable to offer lower prices on other online platforms, the CCI document said.
The next and final phase of the CCI case lies with the CCI leadership, which is still reviewing the findings to decide on any penalties or order changes in the business practices of Swiggy and Zomato.
A final decision may take several weeks, and the companies still have the option of challenging the findings with the CCI.
Published – November 8, 2024 at 3:50 pm (IST)
